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THE OHIO EXPERIENCE: WHAT CAN BE DONE TO

SPUR BROWNFIELD REDEVELOPMENT IN AMERICA’S HEARTLAND?

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERALISM

AND THE CENSUS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

MAY 16, 2005

Serial No. 109–64

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON FEDERALISM AND THE CENSUS

MICHAEL R. TURNER, Ohio, Chairman

CHARLES W. DENT, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

VIRGINIA FOXX, North Carolina

——— ———

WM. LACY CLAY, Missouri

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

JOHN CUADERES, Staff Director

URSULA WOJCIECHOWSKI, Professional Staff Member

JULIANA FRENCH, Clerk

(III)

C O N T E N T S

Page

Hearing held on May 16, 2005 ............................................................................... 1

Statement of:

Dufficy, Joseph, Chief, Brownfields and Early Action Section I, Environmental Protection Agency Region 5 Office; Amy Yersavich, manager,

Voluntary Action Program, Ohio EPA; Frank Sarosy, mayor, Village

of Fairport Harbor, OH; Daniel Pocek, mayor, city of Bedford, OH;

Tracey Nichols, assistant director for economic development, Cuyahoga

County Department of Development; and Casey Stephens, manager

of public services and brownfield coordinator, city of Toledo Division

of Environmental Services ........................................................................... 7

Dufficy, Joseph .......................................................................................... 7

Nichols, Tracey .......................................................................................... 40

Pocek, Daniel ............................................................................................. 28

Sarosy, Frank ............................................................................................ 23

Stephens, Casey ......................................................................................... 57

Yersavich, Amy .......................................................................................... 18

Machaskee, Alex, president and publisher, the Plain Dealer; Todd Davis,

CEO, Hemisphere Development, LLC; Thomas Stone, executive director, Mt. Pleasant Now Development Corp.; Barry Franz, principal engineer, Civil & Environmental Consultants, Inc.; Craig Kasper, CEO,

Hull & Associates, Inc.; and Kevin O’Brien, executive director, Great

Lakes Environmental Finance Center, Cleveland State University,

Maxine Goodman Levin College of Urban Affairs ...................................... 78

Davis, Todd ................................................................................................ 85

Franz, Barry .............................................................................................. 103

Kasper, Craig ............................................................................................. 112

Machaskee, Alex ........................................................................................ 78

Stone, Thomas ........................................................................................... 99

Letters, statements, etc., submitted for the record by:

Davis, Todd, CEO, Hemisphere Development, LLC, prepared statement

of ..................................................................................................................... 86

Dufficy, Joseph, Chief, Brownfields and Early Action Section I, Environmental Protection Agency Region 5 Office, prepared statement of .......... 9

Franz, Barry, principal engineer, Civil & Environmental Consultants,

Inc., prepared statement of .......................................................................... 104

Jones, Hon. Stephanie Tubbs, a Representative in Congress from the

State of Ohio, prepared statement of .......................................................... 70

Kasper, Craig, CEO, Hull & Associates, Inc., prepared statement of .......... 114

Machaskee, Alex, president and publisher, the Plain Dealer, prepared

statement of ................................................................................................... 81

Nichols, Tracey, assistant director for economic development, Cuyahoga

County Department of Development, prepared statement of ................... 42

Pocek, Daniel, mayor, city of Bedford, OH, prepared statement of .............. 29

Sarosy, Frank, mayor, Village of Fairport Harbor, OH, prepared statement of ........................................................................................................... 25

Stephens, Casey, manager of public services and brownfield coordinator,

city of Toledo Division of Environmental Services, prepared statement

of ..................................................................................................................... 58

Stone, Thomas, executive director, Mt. Pleasant Now Development Corp.,

prepared statement of ................................................................................... 101

Turner, Hon. Michael R., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 3

Yersavich, Amy, manager, Voluntary Action Program, Ohio EPA, prepared statement of ........................................................................................ 20

(1)

THE OHIO EXPERIENCE: WHAT CAN BE DONE

TO SPUR BROWNFIELD REDEVELOPMENT

IN AMERICA’S HEARTLAND?

MONDAY, MAY 16, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERALISM AND THE CENSUS,

COMMITTEE ON GOVERNMENT REFORM,

Cleveland, OH.

The subcommittee met, pursuant to notice, at 10:30 a.m., in the

1914 Lounge, The Thwing Center at Case Western Reserve University, 11111 Euclid Avenue, Cleveland, OH, the Honorable Michael

R. Turner (chairman of the subcommittee) presiding.

Present: Representatives Turner, LaTourette, and Jones of Ohio.

Staff present: John Cuaderes, staff director; Shannon Weinberg,

counsel; and Juliana French, clerk.

Mr. HUNTER. Good morning. I’m Edward Hunter, president of

Case Western Reserve University. I just wanted to offer a brief

welcome to all of you. I want to thank Chairman Turner for hosting

this hearing here on our campus for his subcommittee. We really

are honored to have you all here today.

It’s a special honor because Congressman Turner is an alumnus

of Case Western Reserve University, of our law school. I also want

to welcome Congressman LaTourette, who is also a great friend of

Case Western Reserve.

And I also want to thank all of the people who are testifying here

today—for your efforts to help with urban redevelopment and

brownfield redevelopment. As you know, Case has made a major

commitment to urban redevelopment in this area. And so this is a

very, very important issue for us locally, for the State of Ohio, and

nationally as well.

I hope you have a very good time here. I hope you’ll take some

time to walk around and see the campus, because we’re trying to

walk the talk. As you may know, we’ve tried to do some interventions here in the local area in the way we’re building our new residential villages, reaching out to the community, moving some of

our back office people downtown to help with downtown revitalization.

We started a home buyer program here at Case so any employee,

faculty or staff member of Case gets a very generous sum of money

from the university to buy a home, if they buy a house in the city

of Cleveland. And since we started that program, for the spast year

we’ve had a house a week bought in the city of Cleveland.

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There are a lot of other innovative programs that we’ve had in

working with minority contractors to do a lot of the work in these

areas. So it’s been a very, very wonderful collaboration between our

university and the city of Cleveland. So thank you, again, for honoring us by hosting this here on campus and enjoy your time here.

Thank you.

Mr. TURNER. With that, we’ll call to order the Subcommittee of

Federalism and the Census. I appreciate Case Western Reserve

University hosting us and I appreciate the attendance by my colleague, Steven LaTourette. We’re going to be joined by Stephanie

Tubbs Jones, who currently is in an event in downtown Cleveland

and encouraged us to go ahead and proceed. So we’ll begin with

panel one, taking testimony, and then Ms. Tubbs should be joining

us later.

I have a short statement to read in welcoming everybody to the

subcommittee hearing. This is a followup to a hearing that we held

on the same topic in Washington, DC, on April 5, 2005. This is the

subcommittee’s first field hearing and our first opportunity to interact with individual communities on a more personal basis.

Hearings in D.C. have been informative and helpful. All too often

we only get the inside-the-beltway viewpoint. So the field hearings

give us the opportunity to reach out to the public and learn firsthand what is occurring in this important topic of brownfield development. I’m very pleased with the response to the hearing, both

from our great number of witnesses and the public in attendance

here today. I would also like to express my appreciation to the city

of Cleveland for hosting us.

We have a great number of witnesses to present and we are here

to listen to you. And in the interest of time, the full statements of

the written statements that are being entered into the record are

out at the press table up front. And we’re going to keep our opening comments short so we can get the witnesses and hear what you

guys are doing to improve our communities in the area of

brownfields.

Our first panel includes Joseph Dufficy, Chief of the Brownfields

and Early Action Section, Environmental Protection Agency Region

5; Amy Yersavich, manager, Voluntary Action Program, Ohio EPA;

the Honorary Frank Sarosy, mayor, Village of Fairport Harbor,

OH; the Honorable Daniel Pocek, mayor, city of Bedford, OH; Tracey Nichols, assistant director for economic development, Department of Development, Cuyahoga County, OH; and Casey Stephens,

manager of public services, Brownfield Coordination, Division of

Environmental Services, city of Toledo.

We’ll begin with Mr. Dufficy. My colleague, Mr. LaTourette, has

opening comments, also.

[The prepared statement of Hon. Michael R. Turner follows:]

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Mr. LATOURETTE. Well, thank you very much. And I guess you

want to move along, so I’ll be mercifully brief.

I want to thank you, Congressman Turner, for coming to Cleveland, OH. Welcome to Cleveland, OH for this hearing. The Congressman has hid his light under a bushel basket a little bit in that

he has previously introduced and I understand again will introduce

legislation dealing with brownfield remediation, especially in urban

cities.

He’s a former mayor of Dayton, so he comes to us in the U.S.

Congress as someone who is looked to with a great deal of admiration when it comes to dealing with America’s cities.

He’s also been placed in charge by the Speaker of the House, Mr.

Hastert, of the task force that looks at the unique problems that

face cities across the country. So it’s an honor for us to have you

here and we appreciate you having this hearing.

And just a couple of observations about the panels we put together. And I want to, first of all, indicate to President Hunter, my

son will be a freshman here in the fall and I took the opportunity

to walk over to the undergraduate admissions office before this

hearing began. And President Hunter is right, there is a building

that is completely missing from the corner of Adelbert and Euclid

Avenue. It’s been apparently torn down since my last visit. So he

is walking the walk and doing good things for the University Circle

area.

On the first panel, Mr. Chairman, you have two people, not to

single out anybody in particular, but Mayor Sarosy of Fairport

Harbor is an outstanding mayor of a good, solid community. And

he has had the vision that sometimes is lacking in other parts of

the State that treats Lake Erie as an asset and is doing everything

to move his village forward, so I’m glad he’s here.

Next to him is someone I lost to in the district, Mayor Pocek, the

mayor of Bedford. And I very much liked representing that area,

but I also know Mayor Pocek has done great work in his part of

the world.

On the second panel you have a fellow by the name of Todd

Davis. I know that Mr. Machaskee just joined us, but I’m going to

hold up a rival newspaper. In Sunday’s Lake County News Herald,

anyone who hasn’t seen it, there’s a very exciting long article about

the old Diamond Shamrock property.

Those of us in Lake County were devastated back in the sixties,

like the news going on here in Cleveland with NASA Glenn and

DFAS, the Diamond left, and that’s where most of the people in

Fairport worked was the Diamond. Most of the people in Painesville worked at the Diamond. And Todd Davis, who is on your second panel, is in charge of an organization called Lakeview Bluffs,

and I think we can be very excited to hear what he has to say, as

well.

So thank you for coming to Cleveland, thanks to all of the witnesses for being here, and thank you, Mr. Chairman.

Mr. TURNER. I really appreciate Mr. LaTourette’s participation in

the committee and permitting us to be able to move forward with

the witnesses that he’s recommended.

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This committee, it’s our policy to swear in witnesses prior to

their testimony, so I’m going to ask, if you would, please, stand and

raise your right hands.

[Witnesses sworn.]

Mr. TURNER. Please let the record show that the witnesses all responded in the affirmative.

Mr. Dufficy, we will begin with you.

STATEMENTS OF JOSEPH DUFFICY, CHIEF, BROWNFIELDS

AND EARLY ACTION SECTION I, ENVIRONMENTAL PROTECTION AGENCY REGION 5 OFFICE; AMY YERSAVICH, MANAGER, VOLUNTARY ACTION PROGRAM, OHIO EPA; FRANK

SAROSY, MAYOR, VILLAGE OF FAIRPORT HARBOR, OH; DANIEL POCEK, MAYOR, CITY OF BEDFORD, OH; TRACEY NICHOLS, ASSISTANT DIRECTOR FOR ECONOMIC DEVELOPMENT,

CUYAHOGA COUNTY DEPARTMENT OF DEVELOPMENT; AND

CASEY STEPHENS, MANAGER OF PUBLIC SERVICES AND

BROWNFIELD COORDINATOR, CITY OF TOLEDO DIVISION OF

ENVIRONMENTAL SERVICES

STATEMENT OF JOSEPH DUFFICY

Mr. DUFFICY. Thank you, Mr. Chairman. Good morning, Mr.

Chairman, members of the subcommittee. My name is Joe Dufficy.

I manage the Brownfield and Early Action Section with U.S. EPA’s

Region 5 Office in Chicago. I’m appearing here today to discuss the

EPA’S Brownfields Program and our efforts in the State of Ohio.

More than a decade ago, U.S. EPA identified a problem facing

local communities in their efforts to development properties that

were contaminated or potentially contaminated with hazardous

substances. The private sector and public sectors were extremely

hesitant to get involved at these sites which became known as

brownfields.

It was here in Cuyahoga County that U.S. EPA began providing

seed money to local governments to inventory sites and assessment

for contamination. Congress also ultimately enacted legislation that

provides tax incentives to promote private sector cleanup and redevelopment of brownfields.

Over the years, U.S. EPA also had grants to capitalize revolving

loan funds for cleanup. The agency also provides money for job

training opportunities for employment at brownfield communities.

Since U.S. EPA’s initial efforts, States, tribes and local units of

government as well as non-for-profit organizations have began to

focus us on brownfield cleanup and redevelopment. The Small

Business Liability Relief and Brownfields Revitalization Act broadened the reach of the U.S. EPA grant programs by also providing

statutory liability protection to the sector participation in

brownfield’s cleanup and redevelopment.

Under the new brownfields law, U.S. EPA can now award direct

cleanup grants to the public section as well as not-for-profit entities

that own the property. The new law also broadens the definition

of what constitutes a brownfield. The U.S. EPA can now award

Brownfield moneys to sites contaminated with petroleum as well as

mine-scarred lands and sites contaminated by controlled substances.

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The grand selection and award process for fiscal year 2005 culminated last week with the announcement of over 300 new grants,

19 of which are here in the State of Ohio. The newest grants include 14 assessment awards, four clean-up projects and one revolving loan fund for a total of $7,750,000 here in the State.

As a whole, the State of Ohio constitutes as well as the 40 communities here that have received the U.S. EPA funding one of the

largest concentrations of U.S. EPA funding nationwide. The Ohio

Department of Development’s Revolving Loan Fund is one of the

largest U.S. EPA loan funds in the Nation with over $7 million

right now. Currently more than $65 million in redevelopment work is ongoing across all of U.S. EPA funded projects. Ohio communities have

also inventoried over 10,000 brownfield sites. Ohio EPA and U.S.

EPA have combined resources to perform an additional 30 assessments onsites not targeted by communities for part of the competitive grants program. Both agencies have coordinated their activities to minimize duplication of efforts and reached the largest number of communities possible.

One thing is clear, that notwithstanding all of the efforts the

Federal, State, local units of government, we will never be able in

the public sector to clean up the hundreds of thousands of sites

that are out there. The only way that will happen is with significant increases in funding and influences from the private sector.

Mr. Chairman, that completes my statement and I would be

pleased to answer any questions.

[The prepared statement of Mr. Dufficy follows:]

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Mr. TURNER. Ms. Yersavich.

STATEMENT OF AMY YERSAVICH

Ms. YERSAVICH. Thank you, Mr. Chairman. Thank you, Mr.

Chairman and members of the subcommittee. My name is Amy

Yersavich. I’m the manager of the Voluntary Action Program at

Ohio EPA. And I would like to thank you for the opportunity to

speak today on behalf of Joseph Koncelik, director of Ohio EPA,

about the brownfield redevelopment needs of Ohio communities. In

both large urban areas and small towns, brownfields exist and create not only blights, but environmental and safety hazards. These

brownfields are also a reminder of jobs lost and opportunities

missed.

Ohio has operated a successful brownfield cleanup program,

known as the Voluntary Action Program, since 1994 when the legislation for the program was signed by Senator Voinovich. Thank

you God for Voinovich. The program allows for licensed environmental professionals to privately clean up Ohio brownfields using

state-of-the-art technical requirements adopted by Ohio EPA.

Once the properties are cleaned up appropriately, Ohio EPA reviews the documentation and issues a release from State civil liability for the cleanup. To date, over 200 properties have been

cleaned up, both private and public, under the Voluntary Action

Program and technical assistance for cleanup has been provided to

over 300 more brownfield owners and volunteers. In return, approximately 7,000 new Ohio part-time and full-time jobs have been

created at these redeveloped sites.

Ohio is also operating an extremely successful brownfield cleanup grant program known as the Clean Ohio Fund. The Clean Ohio

Fund was established in November 2000 when Ohio voters passed

Issue 1. The Clean Ohio Fund provides cleanup assessment grants,

up to $3 million per site, to municipalities for brownfields that they

own or hold interest in. To date, the Clean Ohio Fund provided

over 15 million in assistance funding and over 200 million in revitalization funding to 88 sites across Ohio. In return, the Clean

Ohio Fund has seen $930 million in investment in these properties

and the creation of 6,700 new jobs.

U.S. EPA, through Joe and others, also offers many attractive

brownfield cleanup incentives with funding made available through

the Small Business Liability Relief and Brownfields Revitalization

Act of 2002. As a result of this act, 29 cities and towns in Ohio

have received grant funding for investigation and cleanup of

brownfield sites that have blighted their communities. This fund

has been a tremendous help toward revitalizing these communities,

urban cores and has resulted in both job creation and retention.

Despite all the innovative financial incentive programs and technical assistance available to make brownfield cleanup easier at

former commercial industrial sites, there are still obstacles. Encouraging private developers to take on brownfield redevelopment

projects at sites with large amounts of contamination or where

complex cleanup is needed are a few of those obstacles.

Most government brownfield incentives are made available only

to local governments or other governmental entities. Providing a

tax credit that would encourage the private sector to increase their

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brownfields redevelopment work, as you have proposed, Chairman

Turner, would provide a tremendous boost to Ohio’s urban core and

small town revitalization efforts.

Chairman Turner and members of the subcommittee, I thank you

for allowing me to testify at this hearing today. On behalf of Director Koncelik and the many communities in Ohio that are dealing

with challenges of brownfield redevelopment, your interest is greatly appreciated.

[The prepared statement of Ms. Yersavich follows:]

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Mr. TURNER. Mr. Sarosy.

STATEMENT OF FRANK SAROSY

Mr. SAROSY. Mr. Chairman and distinguished members of the

subcommittee, I would like to thank you for the opportunity to be

a part of this important discussion. I am Frank Sarosy, mayor of

the Village of Fairport Harbor, OH. And on behalf of my community, I would like to discuss how one brownfield remediation has

had a positive impact on my community.

Fairport is an ideal community sitting on the shorelines of Lake

Erie. On the eastern edge of the village, however, there had been

a large vacant parcel of land that had sat unused for years. This

land was formerly the home of Diamond Shamrock Painesville

Works. It was more than 1,000 acres of land that straddles

Fairport Harbor, the city of Painesville and Painesville Township.

This was some of our most desirable lakefront property, and that

was hugging the shoreline atop of a scenic stretch of bluffs. We

could not capitalize on it, however, because its former use as the

home of Diamond Shamrock had left it a major brownfield site.

The land had been put to many uses over the years, such as serving as a 500-acre settling pond, as a home to heavy manufacturing

and as a landfill. In 1980, the U.S. EPA initiated action to remedy

chromium contamination at the site, which resulted in the construction of a 120-acre clay cap over the impacted area. The Ohio

EPA began enforcement activities for the rest of the site in 1989.

This property was a perfect example of how a brownfield can affect a community. At its height, the Diamond Shamrock property

employed more than 3,000 people. And after it closed in 1976,

Fairport Harbor lost not only those jobs, but also the use of this

land. Until we could find some way to remedy the contamination

of the land, it would remain idle and unused.

Fortunately, Hemisphere Development stepped into the picture

in 2002. Their president, Todd Davis, brought his nationally recognized expertise to bear on this project and put forward a vision

that will change Fairport Harbor and the neighboring communities.

In a partnership with Fairport Harbor, the Ohio EPA, Lake

County, Lake County MetroParks, and local municipalities, Hemisphere has developed a plan for redeveloping the site.

The formerly used Diamond Shamrock site is now known as

Lakeview Bluffs and, once completed, it will be a national model

for brownfield redevelopment. The mixed-use project will feature a

variety of housing options, commercial development, public park,

not to mention breathtaking views of Lake Erie and some of the

best steelhead trout fishing in the world.

Hemisphere is creating several recreation destinations linked by

aesthetically pleasing trails, permanent public access to the Grand

River, a commercial vineyard, a trout club, a winery, and new residential development overlooking both Lake Erie and the Grand

River.

The land’s many rich endowments include more than a linear

mile of shoreline, breakwall protection for the development of a

commercial marina in the harbor, and a stretch of scenic Grand

River that is renowned by fishermen as one of the best spots in the

Nation to catch a steelhead trout.

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Lakeview Bluffs represents an unprecedented opportunity resolve

years of contentious litigation and reclaim one of Ohio’s most promising brownfield sites. Ultimately, the project will be one of the

largest and most comprehensive brownfield developments in the

United States, serving as a national model for the effective integration of green space planning, reclamation and redevelopment. Further, the project represents the best example of the amazing community transformation that can occur through the power of the

public private/partnerships.

And I would like to thank you.

[The prepared statement of Mr. Sarosy follows:]

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Mr. TURNER. Mr. Pocek.

STATEMENT OF DANIEL POCEK

Mr. POCEK. My name is Daniel Pocek. I’m the mayor of the city

of Bedford. We are a historical city of 14,000 plus residents, we

have a downtown and neighborhoods. We also have Taylor Chair,

the oldest manufacturing concern in the State of Ohio in continuous operations since 1816. In essence, we have a history.

The city of Bedford has been committed to redevelopment of the

former Brush Wellman site located at 200 Egbert Road in Bedford,

OH. This formerly vibrant site has been vacant since 1986 and previously employed 400 plus employees and provided the City with

beneficial tax revenue. The site needs to be fully developed to meet

the needs of the community.

With an unemployment rate of 6.4 percent that includes 8 surrounding communities and the city’s poverty rate doubling from

census year 1990 to 2000 to 8 percent of its 14,212 residents, it’s

imperative that the site be developed to its full potential.

With the balance of land uses, the city’s current makeup of industrial land is 3.3 percent and 8.8 percent of the total land mass

is commercial. This leaves the site as the only major redevelopment

opportunity left in the city of Bedford’s 5.4 square mile radius. The

city relies on its land uses to be the most practical and economical

for its residents and the city. Light industrial commercial land use

at this site will best address the city and community needs.

With this, the site can prosper, not only for the business sector,

but also for the potential of the employment it can create. There’s

an estimated 50 acres for planned mixed use development, with a

potential of 300,000 square feet of developable space, increasing

property values from $318,200 in 2004 to $28 million in 2008, and

the likelihood of creating and retaining up to 500 plus jobs.

The redevelopment site has been vacant almost for 20 years. It

has generally little or no tax revenue and has zero employment

base for the city. The city of Bedford supported the redevelopment

of the site that maximizes the developable acreage and, thus, the

number of jobs created.

It was through the efforts of Cuyahoga County Commissioners,

we were granted a $500,000 grant and a $500,000 loan to the

project. The State of Ohio came up with almost $900,000 in funds

to redevelop the infrastructure.

The final piece of the puzzle was pursued by the Cuyahoga County Development Department. They were the vehicle for the city of

Bedford to apply for the BEDI Grant. The city was able to compete

for this grant on an even par with much larger communities. In October 2004, they were awarded—the HUD awarded 17 grants out

of over 100 applications, and we were one of them. We were the

only one in the State of Ohio. With that grant, we feel we have

guaranteed the economic survivability of the city and the community, as well as the region, for the next generation.

I want to thank the chairman and the members of the committee

for the opportunity to appear here today. I would be happy to answer any questions you may have. Thank you.

[The prepared statement of Mr. Pocek follows:]

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STATEMENT OF TRACEY NICHOLS

Ms. NICHOLS. Mr. Chairman, members of the subcommittee. In

my 21 years in community and economic development in the region, I have seen no other program that benefits the community to

the extent that brownfields remediation does. Besides the obvious

benefits to health and safety of our citizens, the economic benefits

we have seen in Cuyahoga County exceed any other economic development program.

In 1998, the Board of County Commissions issued a bond to fund

brownfield redevelopment. Since 1998, 21 projects have been funded, 6 projects are cleaned up with a new end user open onsite, over

1,400 jobs have been created or retained, and $562,000 in new annual property taxes have been generated, even with two projects

partially tax abated. We have leveraged over $14 for every $1 the

county has invested.

An important aspect of the county program is that we provide up

to $1 million per project, and up to 45 percent of that amount is

either a subsidy or a forgivable loan. This subsidy is critical for developers and businesses to invest in these properties.

We also have a brownfield prevention program called our site expansion program that provides up to $500,000 as a forgivable loan

to companies expanding on an adjacent brownfield site rather than

moving to a greenfield site in another location. In many cases, companies leave behind additional brownfield sites when they relocate.

While the program has been quite successful, some of our larger

and more complicated sites could not be done without the assistance of Federal and State brownfield programs. Last year, as

Mayor Pocek said, the county received a $2 million BEDI Grant

and $4 million in HUD 108 funds to redevelop a 50-acre brownfield

site in Bedford.

We have also received U.S. EPA funding for site assessments and

revolving loan funds. While these programs have been very helpful,

there needs to be more funding available. The county currently has

16 project applications for a total of $13.9 million in funding. These

are for projects that are ready to go with end users.

With our current funding sources we will be $3.5 million short.

Without some type of subsidy, many of these projects will not go

forward. To that end, we encourage the Federal Government to go

forward with tax credits as a way to attract equity investments to

these projects. We appreciate that the current house bill is taking

out the provision limiting funds to only communities where the

census track poverty rate is 20 percent or more. That provision

would have limited these funds to only 8 of our 59 communities in

Cuyahoga County.

We also support increases to the U.S. EPA revolving loan fund

and the HUD BEDI Grants. Both provide needed grants to help

with large or more contaminated sites and help us in tougher real

estate markets, such as the Greater Cleveland area.

We also strongly urge the Congress to consider providing administrative funds for these grants, such as those provided with Block

Grant and Home Funds. We think this will help move funds out

to the community more quickly.

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I thank the committee for inviting me here today to speak on behalf of the Cuyahoga County Board of Commissioners on this important issue.

[The prepared statement of Ms. Nichols follows:]

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STATEMENT OF CASEY STEPHENS

Mr. STEPHENS. Mr. Chairman and members of the subcommittee,

my name is Casey Stephens. I am with the city of Toledo, the

Brownfields Coordinator.

I would like to take this opportunity to thank the subcommittee

and also to commend the U.S. EPA for all of their efforts over the

past several years in brownfield redevelopment.

As you know, the city of Toledo has a long history of industrial

development. And as you would expect, we have a significant number of brownfields. And while we’ve been very successful in cleaning up contaminated and industrial sites and getting them back

into reuse, with examples such as the Owens Corning world headquarters and the DaimlerChrysler North Toledo assembly plant, we

found that there are certain areas of the city that have been left

behind. And those areas of the city are the central city area that

are most impacted by brownfield locations located there.

Mayor Ford’s goal of having clean, safe and beautiful neighbors

goes hand and hand with the economic development and the

brownfield cleanup in these central city areas. And as such, the

city of Toledo has identified a given area of the city that we refer

to as the brownfield impact area. That area was identified by using

census data and by combining that with our brownfield inventory;

it was also identified as an area of the city that was most impacted

by the presence of brownfields.

Levels of poverty and unemployment in the brownfield impact

area are greater than in any other parts of the city. Since 1970,

Toledo has lost nearly 70,000 people from our population. And of

that, over 65,000 people have migrated from the brownfield impact

area. So as you can see, the impacted brownfield sites on the central city area is quite devastating.

Toledo’s current strategy for redeveloping brownfields is twoprong. We are focusing on our riverfront properties, creating commercial and residential areas that offer sites that cannot be found

in our neighboring suburbs. Our second part of our strategy is to

focus on the brownfield impact area. And we’re doing that in conjunction with the Toledo Public Schools’ reconstruction program.

They are spending nearly $800 million in redeveloping the schools

throughout the city of Toledo. And we are focusing on their construction as a way to enhance brownfield development in residential areas of our brownfield impact area.

We feel this is a very sound strategy. However, our problem is

not finding cleanup money. Our problem is attracting investments

to invest into the central city area. So the city of Toledo supports

anything that the Federal Government can do to help attract private investment into the central city areas.

Thank you for the opportunity to speak. And if you have any

questions, I would be happy to answer them now.

[The prepared statement of Mr. Stephens follows:]

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Mr. TURNER. I want to thank all of you for taking your time to

put together the testimony and for your statements here today. The

Federalism and Census Subcommittee has been looking at the

issue of brownfield redevelopment. Obviously, an area that I have

a particular interest, having served as mayor for the city of Dayton,

a city that has a significant number of brownfields and has been

negatively impacted by its ability to redevelop those sites.

The focus this committee has taken is the relationship between

the Federal Government and the local governments, and certainly

brownfields being a federally created problem, it’s a natural outlook

that we would look at. What are some of the Federal responses,

what are the Federal programs, grant moneys that’s available,

what’s missing, what else do we need to be doing.

As part of our initial hearing on this topic, we had the GAO issue

a report in looking at the available grant programs that are out

there, revolving loan funds, EPA’s Federal financial assistance.

And they had some criticisms of the program and gave some advice

and examples of how communities are accessing them. But they did

go on to say that there was a greater need than the programs that

are currently available can fill.

And it talked about the need for looking to how we can get additional resources to communities to address brownfield issues. And

I know in the great examples that we’ve heard from our two mayors and the great work that is being done throughout Ohio, we

have some great successes, but we also have high need. We have

properties that we know that the environmental contamination,

building demolition costs exceed the value of the property.

Without a financial incentive, these sites are going to be unattractive for people to locate their businesses and we’re going to continue to eat up our greenfields and have broader and broader metro

areas.

My question is that I would ask each of you to speak for a moment about the issue of the need and the resources that are available. Mr. Stephens, you were saying that you haven’t had a problem finding cleanup money. But I know that for most communities,

when they look at trying to redevelop land addressed to

brownfields and make it business ready in a timely fashion so that

when a business is interested in going into a spot so they’ll have

the land redeveloped and ready, that they have struggled in finding

the available resources to address the brownfield cleanup.

So let’s start with Mayor Sarosy, if you would talk about the

issues of what you see as the need versus the available resources

that are out there.

Mr. SAROSY. The need for Fairport and the surrounding communities in all of Lake County is the fact that property has been sitting there, 1,100 and some acres, with nothing happening on it and

contaminated soil and so forth. It’s going to mean a lot to our

schools. It’s going to mean a lot to the surrounding communities.

It’s going to be a regional project for all of the surrounding areas.

Again, not seeing anything happen for many years, it’s going to

have an impact on everybody.

Mr. TURNER. OK.

Mr. POCEK. Very similar situation in city of Bedford to the Village of Fairport Harbor, you have all those much smaller sites, 50-

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acre sites, happens to be the most populated areas of northeast

Ohio. This site is 11⁄2 minutes from 271 and the population growth

is going southeast, and it’s just an excellent place to redevelop. But

it has sat there for 20 years.

And now it’s going to produce at least 500 jobs, be a regional development, and bring more money to the schools. Like I said, we

got approximately a couple hundred thousand dollars in income tax

from Brush Wellman on real estate tax on this from Brush

Wellman in 2004. We’re going to get $28 million projected in 2008.

So that’s a tremendous boom not only to the city, but to the school

district and the region as a whole, because it is a regional development, too.

Mr. TURNER. Ms. Nichols.

Ms. NICHOLS. In 1996 it was estimated that there were 4,623

acres of brownfields in Cuyahoga County. And what we’ve done

with our program is since 1998, we’ve made many changes, as

we’ve seen the market change. And I think one of the most important things that we learned, early on, we were giving money only

to municipalities and non-profits who would buy sites to redevelop

them. As our economy worsened and cities were hard hit and did

not have funds available to go out and buy brownfields to redevelop

them, we changed our program to give funding directly to developers and to offer them a forgivable loan.

Once that happened, we saw a huge increase. We did 21 projects.

We did six from May 2004 to December 31, 2004, after starting the

program in 1998. And now we have 16 projects that we’re currently

looking at. All are private developers who are stepping up to the

plate.

And what’s most important is that we have a subsidy available

to them. Without that subsidy, these projects would not go forward.

So we see a huge demand and a huge need in our community. And

the commissioners have stepped up to the plate and are provided

funding. And we’re looking for partners to go forward with us.

Mr. TURNER. Mr. Stephens.

Mr. STEPHENS. As I said, I don’t want to lessen the impact of

cleanup funds, but we have had the opportunity or we have been

fortunate enough to have been able to access cleanup funds for a

number of projects. Our biggest issue, and I have to reiterate it, is

the fact that we have 1,200 vacant residential lots in our

brownfield impact area. Our largest problem in the city of Toledo

is attracting private investment to the central city area.

Developers have been more than willing to grab for the lower

hanging food, as it were. And we’ve had much success in working

with our industrial partners within the city of Toledo to clean up

sites and to redevelop those sites. But our biggest focus now is out

in those central city areas. And quite frankly, we’d like to see the

line in the bill about the areas of poverty levels greater than 20

percent, because we think that will focus in on areas in the central

city.

And it’s the city of Toledo’s point or the city of Toledo’s stance

that you can’t have a strong suburban area without a strong core

area. And we feel that anything we can do to attract investment,

private investment, into the central city, into the core area will go

a long way in strengthening our whole regional economy.

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Mr. TURNER. Ms. Yersavich.

Ms. YERSAVICH. Thank you, Mr. Chairman, and the rest of the

representatives.

Yes, I would say, I would have to agree with Mr. Stephens. I

think a lot of what we’re seeing where the need is now is some of

the higher hanging fruit, some of the more complicated sites that

maybe need a little push. I think helping out with private developers as well as public is very, very helpful and is a direct need.

And the Voluntary Action Program, what a volunteer receives, they

receive a tax abatement on real property taxes for 10 years for the

increase in the value of the property as a result of the cleanup, but

also any improvements that are on it, and that’s been very popular.

And that is provided to both the private and the public alike.

I would also say we see along with big cities is some of our smaller towns, particularly those that need a little more education in

brownfields, because they all do have issues of, as the mayor said,

you know, one area in a particular community that may have lost

a lot of jobs, causing blight, causing problems, and working on

helping them do grants, and helping them get the funding and the

incentives that they need to get things started in their communities. Thank you.

Mr. TURNER. We’ve been joined by Stephanie Tubbs Jones, who

is the Congresswoman for this area, also a fellow alumni of Case

Western Reserve.

Ms. JONES OF OHIO. Double alumni.

Mr. TURNER. I had the honor to follow in Stephanie Tubbs Jones’

tracks and give a commencement speech for our law school, of

which we’re both an alumni from.

Stephanie is a co-author with me of the Brownfield Tax Credit

Act, and she’s been incredibly supportive of the issue of trying to

make certain we have a Federal response and resources to assist

communities in redevelopment and addressing issues of

brownfields.

I appreciate her joining us so that we can have this hearing in

Cleveland and get the additional information that you bring to us,

because we look to this committee trying to get data and information on ways to address the brownfield issue. We, of course, have

the various Members of the committee and their local experience,

but being able to come here and to get your experience and your

testimony really helps us fashion some solutions.

With that, I would like to recognize Ms. Stephanie Tubbs Jones.

Mrs. JONES OF OHIO. Thank you, Mr. Chairman. I am so pleased

that you would choose the 11th Congressional District of Ohio to

host this wonderful hearing in and to give the people in my congressional district an opportunity to speak out on the issue.

I must apologize for being late. When you’re in your congressional district with a hearing, there’s 7,000 other things that draw

people to you. And then you know that the recent announcement

with the closing of DFAS, there was a meeting this morning of all

the staff of DFAS to talk about that issue. And myself and my colleague, Congressman Dennis Kucinich, were at that hearing. I’m

expecting that he may hold down the fort there while I’m holding

down the fort here, so that is the reason that I’m late.

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But the issue of brownfields is so very, very important for the redevelopment of our area. I have an opening statement that I would

ask to be put into the record, with regard to a number of

brownfields and the things that Cuyahoga County and others like

Mayor Pocek have been able to do in their community.

I can think of a couple other sites where we’ve taken brownfields

and had an opportunity. For example, I’m hoping this is going to

happen soon that we’re going to have a ground breaking for the Job

Corps, which is that old White Motors site, and that we’re going

to have a ground breaking that we can get some issues for the Juvenile Court Detention Center on brownfields.

But it is just a great opportunity for us to get into this issue as

it impacts—I would like to welcome the city of Toledo, Fairport

Harbor, OH EPA. I used to work at the sewer district, so it’s just

good. Tracey, as well. Let me ask Tracey. Based on your testimony,

Ms. Nichols, excuse me, let me be more formal for the record, a

huge collection of dollars is a result of the brownfield work that

Cuyahoga County does. Do you take those funds and reinvest them

in brownfield redevelopment? What happens?

[The prepared statement of Hon. Stephanie Tubbs Jones follows:]

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Ms. NICHOLS. Well, Congresswoman, our funding for the

brownfields program is from a bond, so part of the money that we

do receive back is to pay the bond. That was our only option at the

time; to be able to fund this program is to float a bond through the

county commissioners.

However, we have seen large amounts of tax increases that do

go back into the community. As I said, right now on six completed

projects, there is $562,000 in new annual taxes which benefit the

local communities, the schools and the county. So we’re very happy

to see those types of amounts.

We do have a small amount of revolving loan funds. We are very

proud of the fact that Cuyahoga County is the first entity in the

Nation to revolve the initial pilot money and convert the new

brownfield revolving loan fund under the U.S. EPA. So we’re very

happy about that and we now have those moneys available with

some additional supplemental funding.

Those will revolve. We have set up a revolving loan fund. And

just like our economic development program where we have a long

view in our office to cater revolving loan funds for future benefits,

we will do that with the U.S. EPA money.

Mrs. JONES OF OHIO. Mayor Pocek, good morning.

Mr. POCEK. Good morning.

Mrs. JONES OF OHIO. I heard the end of your testimony with regard to Brush Wellman. Are there other projects in your city that

you have been using or working on brownfields redevelopment?

Mr. POCEK. No, that’s the first one. That’s the only real

brownfield we have.

Mrs. JONES OF OHIO. What about you, Mayor of Fairport Harbor.

Mr. SAROSY. This is the first time for us, also. We have 1,100

acres sitting east of us where nothing is happening and the impact

it’s going to have, again, I mentioned earlier not just to the region,

but to everybody, schools really close to me, and safety forces were

all hurting in our surrounding areas or communities for getting

some moneys coming in.

What Todd Davis has meant to us, the vision is just unreal. I

mean, everybody, I mean the money will flow in after we go.

Mrs. JONES OF OHIO. Yersavich.

Ms. YERSAVICH. Yes.

Mrs. JONES OF OHIO. Ms. Yersavich, have you found any impact

of brownfields on water redevelopment projects in any communities.

Ms. YERSAVICH. We are seeing a lot more of those. I think first,

when the program first started our voluntary cleanup program, we

didn’t see as much because it is a difficult type of cleanup to deal

with because you’re usually looking at not only the lands, but the

waters and who caused what and that sort of thing.

But I think as the program has matured and with the advent of

the Clean Ohio Fund, putting more money into it along with the

Federal grant, we’re seeing a lot more waterway cleanup, and

things like Diamond Shamrock.

Mrs. JONES OF OHIO. In case I didn’t do this, welcome, Congressman LaTourette, to the 11th Congressional District.

Mr. LATOURETTE. They checked my credentials when I crossed

the border.

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Mrs. JONES OF OHIO. I’m going to cutoff so we can go on to the

next thing. In a yes or no answer, you all are real exited about this

legislation. Mr. Dufficy.

Mr. DUFFICY. I’ve been doing this for about as long as anybody

in Federal Government and what brownfields need is as many tools

in the toolbox as you can possibly get. The issue at hand is largely

real estate transactions. That’s really what a brownfield is. And

anything that can impact whether a real estate transaction can go

forward is what we really need.

The issue is whether you want to market. I think what Tracey

and what Stacy have said, if you have the market to take the public sector resources that are out there, a project is going to go forward. We don’t have to market—the public sector money really has

to work an awful lot harder and often isn’t substantial enough to

make a project happen on it’s own.

Mrs. JONES OF OHIO. Mr. Stephens, anything you want to add

before I cutoff my questioning.

Mr. STEPHENS. Well, I just want to say that, yes, the city of Toledo is in support of the legislation. And as I said earlier, anything

that the Federal Government can do to encourage investment in

our brownfield impact areas would be most welcomed. Thank you.

Mrs. JONES OF OHIO. I’m sorry, Mayor. Yes.

Mr. SAROSY. I just had something, when you mentioned the

lakefront——

Mrs. JONES OF OHIO. I thought about you, but then——

Mr. SAROSY. In touching on that, we have a costal renovation

plan going on right now in Lake County and it’s headed up by

Harry Ellen which is like 23 acres. And, again, this Lakeview Bluff

property is going to have a major impact on all of Lake County. We

have a lot of erosion, it’s going to help us stop the erosion that

we’re having. So for that 23 miles that we have going along our

shoreline, for our whole county, it’s going to have a major, major

impact.

Mrs. JONES OF OHIO. I used to go to Fairport Harbor Beach when

I was a little girl two or three times in the summertime. I haven’t

been in a while. I’ll have to call you when I’m coming.

Mr. POCEK. I just want to add that the very fact is that Bedford

is totally landlocked, totally developed, and this is the last piece

that we had. With increasing burdens on the city, we have to come

up with other revenue sources, and this was a Godsend to us.

And the fact that BEDI Grant, the way it was structured and the

way we applied, we applied with 100 plus some communities across

the Nation. We were awarded, you know, we were in competition

with the city of Akron, we also won with the city of Sacramento,

CA. So the way it was structured was really fair. And it gave us

an opportunity to compete. And if it’s not broke, don’t fix it.

Mrs. JONES OF OHIO. All I can say, if Brush Wellman had won

that, we would have probably fallen down. We worked very hard.

Mr. POCEK. We have some champions that we have in this room

who I want to thank publicly.

Mr. LATOURETTE. Thank you very much, Mr. Chairman and Congresswoman Tubbs Jones. It’s a pleasure to be in the public and

I hope to welcome you out to Fairport Harbor sometime. The mayor

has done a great job in cooperation with the MetroParks. That realVerDate 11-MAY-2000 12:01 Sep 29, 2005 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 D:\DOCS\23258.TXT HGOVREF1 PsN: HGOVREF1
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ly is the key to this Lakeview Bluffs projects is partnerships and

everybody pulling in the same direction.

That’s why I asked, Mayor Sarosy, in the article I referred to in

yesterday’s News Harold, the soup pond that they covered with the

clay cap, I thought I heard in the article they actually planted

grapes on that site.

Mr. SAROSY. Yes. As a matter of fact, the soil is one of the top

of the State. We had Ohio State come in and work on the vineyards

there for us. And the soil there is just excellent for the vineyards.

Mr. LATOURETTE. And the project, and I know Mr. Davis will

talk about it, but it really is going to be an exciting mixed use.

You’re going to have residential properties, you’re going to have a

golf course, you’re going to have some businesses, you’re going to

have some retail. And I think that gets to, and I want to talk to

Mr. Stephens in just a second about where the 70,000 people went,

because that is a Browns game, and maybe we can talk about that,

but one of the issues that’s going on in Lakeview Bluffs that

doesn’t have so much to do with the financing and the talking

about today, is the level that we reach in cleanup.

And I hear from some of my friends on the Fairport project, I

hear some of my friends on the Ashtabula Harbor project that has

been wildly successful. Hopefully we’ll finally be able to dig some

dirt out of the harbor after many, many years.

And can you just, Mr. Dufficy, start with you, I would just tell

you that I think you’re in the right office being in Region 5, because I think the last guy that had it is the President of Lithuania.

So I think it’s a good path you’re on here.

Can you talk to us just a little bit as well about this. People complain that three things hold us back. Money is one that we’re talking about today. Two is the liability that’s attached if you make a

loan on the property or develop the property, if you own a

brownfield. And then three is the level of cleanup that’s required

before we can move forward with additional uses.

Can you just talk to us about how you feel about that debate,

where we are today. Are we better off today? Are we incentivizing

people, beside giving them money?

Mr. DUFFICY. First off, I’m just a brownfield guy.

We’re in a much better situation today than we were. From a

cleanup standpoint, I think that the secret in a lot of the Federal

programs, especially the U.S. EPA, has been pulling out of the direct oversight and allowing programs like Amy’s corrective action

programs to go forward and really define within the communities

at hand how clean is clean.

I say just about every cleanup you see in a brownfield scenario

right now is happening because we know what the next use is

going to be. Taking a cleanup out of context is cleanup for cleanup,

and no one can afford to do that. So if the cleanup is focused on

exactly what the next use can be, it allows the government to do

what it can do best, ensure public health, among other things.

And also, when you have put in perspective, you know, what

kind of Constitutional controls can be put in place, be able to track

things that are left behind. But we’re in a much, much better situation now.

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Mr. LATOURETTE. Can I ask you this about the revolving loan

fund, because I think those are small loans, are they not, like a

million dollars, not millions of dollars.

Mr. DUFFICY. Right.

Mr. LATOURETTE. Go on to the Ashtabula situation. I don’t know

what Lakeview Bluffs is going to cost. Just the Federal kick-in on

Ashtabula Harbor is $40 million. So if we had to do a million at

a time, we would all be dead and our grandchildren would be dealing with the problem.

Would it help you if the size of those revolving loan fund grants,

if we said, you know what, this year we’re going to take care of

Cleveland, so put all our money in Cleveland, then go to Toledo,

rather than sort of dribble it out at a million dollars a plan. Would

that be more helpful?

Mr. DUFFICY. More money is always going to be helpful. Again,

right now all the public sector programs that are out there are

really focused on trying to find as much public sector resource really as possible. Either going to be a finance situation, a transaction

that can take that extra debt on, you know, loan scenario.

If you’re talking about a loan in a scenario such as a community

that’s landlocked, this is the only thing we’ve got and they’ve got

to do up with the wherewithal to do this entire development on

their own, you’re not really looking at a loan which is really going

to benefit anybody. Because the loan has to find other money to

really work well with. And in that scenario, a grant or some mechanism would be a lot better. The loan mechanism works when you

have a transaction that can take on extra debt.

Mrs. JONES OF OHIO. Ms. Yersavich, my friend in the park communities thinks the Clean Ohio is the greatest thing since sliced

bread, so I really want to thank you and the administrators and

Senator Voinovich for putting it together, because you’re really

doing good work.

Mr. Stephens, they tell me I’ve got to get a second round. The

70,000 people, where did they go?

Mr. STEPHENS. Well, as people with the economic ability to flee

the city left for our suburbs, those left in the brownfield impact

area, again, migrated out to the neighbors with higher economic

values, better schools, that type of area.

So we’ve seen a series of migrations, basically the, quote unquote, white flight out of the city into our suburbs. And then the

movement of those in the central city, you know, migrating out toward the fringes of the city.

Mr. LATOURETTE. I think that’s not an uncommon experience.

What was the name of that project on the river, what was that development called, the River Walk or the Riverside?

Mr. STEPHENS. The marina district?

Mr. LATOURETTE. You had hotels and floating boats.

Mr. STEPHENS. Portside.

Mr. LATOURETTE. Portside. My sense is, and I know there’s a

press conference going on in Cleveland about the renovation of the

Flats and Stephanie talked about the DFAS problems and NASA

Glenn.

One of the things that impressed me was when President Hunter

was talking about this program they have here; if you buy a house

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in the city of Cleveland, good things happen to you as an employee

of Case Western University. I think not only do you have to redevelop brownfields, people have to have stuff to do. And I’m sure you

know as a city planner, and I know Ms. Nichols does, that you just

can’t have factories anymore, you have to have, like Mayor Sarosy

said, golf courses and shops and places for people to go.

So I really hope, Mr. Chairman, as we move forward, you move

forward in your leadership and so forth on this brownfield issue,

that our city planning take a look at stuff to do in Cleveland. And

not only to get people to come back downtown and work, but they

should live here and play here, and not come down every other

Sunday for a Browns game or 73 times a year for an Indians game.

So thank you for your courtesy.

Mrs. JONES OF OHIO. If I could just add something, Mr. Chairman. I’ve had a meeting, a small business committee hearing the

other day and then I was at a banking committee hearing on HUD,

all outside of my jurisdiction. But it just seemed to me what would

make a lot of sense would be for HUD and SBA to have a relationship where they’re developing housing and business, you know,

that would be part and parcel of the development of communities,

where they would be able to do that more such that we could get

to the very issue that you’re talking about of having jobs, having

housing and something to do.

Mr. TURNER. Mr. Pocek.

Mr. POCEK. Mr. Chairman, just what both Congressman

LaTourette and Congresswoman Jones said, if you look at the current trend in architecture and in development, you look at Crocker

Park, you look at the Brunswick Town Center. They are taking and

doing multiple uses. And they’re going to build residential, commercial. And this is where ideally what they’re trying to do in the

flats area is the same thing. And this is, I think, the trend.

And if you could plug in, like Congresswoman Jones said, both

HUD and add small banking industry together, this would make

a redevelopment of the entire city. Because you have what is the

mixed use. The city itself is basically a mixed use. And it makes

most sense. The best kind of communities have a diversified mixeduse community.

Mr. TURNER. Thank you. I want to thank you for your testimony

and for your time that you’re providing to us. As the committee

looks to the issue of the Federal response in relationship, your testimony of your success and what your communities are doing will

be very helpful.

With respect to the bill that provides the tax credits that all

three members who are here are cosponsors of, your testimony is

also very helpful as we look at how that program would be structured. The bill, House bill 4480 is a billion dollar annual tax credit

program for environmental remediation and building demolition on

brownfield sites.

As we move forward to try to get support for this bill, hearing

the ways in which brownfields have been addressed in communities, the programs that are currently out there and their success,

helps provide some of the justification for the bill itself, because we

can see that when funding is available, that when communities are

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able to address brownfield sites, that they do have successful developments in their community.

The bill has been endorsed by every major mayor of every major

city in Ohio. I certainly would encourage both of the two mayors

here to lend their support for the legislation also. And it has been

endorsed by the U.S. Conference of Mayors, the Industrial Parks

Association, the Shopping Centers Association. And your information and testimony will help us as we move forward.

So I want to thank you and I want to give you one opportunity,

if there’s anything that you would like to put on the record, if

there’s something that you heard someone else say that you want

to add a comment to. Anybody?

Ms. NICHOLS. I just want to also mention that the county has

reached out to our partners in the city of Cleveland and the First

Suburbs Coalition and we have created the Northcoast Brownfield

Coalition. And one of the things that was in the GAO report was

the creation of coalitions to kind of consolidate resources in regards

to staffing and legal services, etc.

And we believe in this area that is another important area that

we need to investigate and to have tied more to U.S. EPA funding

and local availability, as we believe those areas can truly get the

money out and spend it in a timely basis. Thank you.

Mr. TURNER. Any other comments? If not, we’ll take a 5-minute

recess as we go to our second panel.

[Recess.]

Mr. TURNER. Calling the meeting back to order. I want to thank

all of our panelists on the second panel for coming and taking time

out of their busy schedules to share with us their testimony on the

important issues of brownfield redevelopment.

On panel two we have Alex Machaskee, president and publisher

of the Plain Dealer. We have Todd Davis, chief executive officer of

Hemisphere Development LLC. We have Thomas Stone, executive

director of Mt. Pleasant NOW Development Corp. We have Barry

Franz, principal engineer, Civil & Environmental Consultants.

Craig Kasper, chief executive officer, Hull & Associates.

And each of you, I know, will be telling us your experience and

backgrounds and efforts in looking at the brownfield issues.

And we’ll start with Mr. Machaskee.

STATEMENTS OF ALEX MACHASKEE, PRESIDENT AND PUBLISHER, THE PLAIN DEALER; TODD DAVIS, CEO, HEMISPHERE DEVELOPMENT, LLC; THOMAS STONE, EXECUTIVE

DIRECTOR, MT. PLEASANT NOW DEVELOPMENT CORP.;

BARRY FRANZ, PRINCIPAL ENGINEER, CIVIL & ENVIRONMENTAL CONSULTANTS, INC.; CRAIG KASPER, CEO, HULL &

ASSOCIATES, INC.; AND KEVIN O’BRIEN, EXECUTIVE DIRECTOR, GREAT LAKES ENVIRONMENTAL FINANCE CENTER,

CLEVELAND STATE UNIVERSITY, MAXINE GOODMAN LEVIN

COLLEGE OF URBAN AFFAIRS

STATEMENT OF ALEX MACHASKEE

Mr. MACHASKEE. Good morning, Mr. Chairman. Good morning,

Mr. Chairman and members of the subcommittee. My name is Alex

Machaskee and I’m president and publisher of the Plain Dealer

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Publishing Co. I represent Ohio’s largest newspaper with readership of over 1.1 million people daily. The Plain Dealer owns and

operates a 245,000-square-foot office building in Downtown Cleveland, OH and a 600,000-square-foot printing and distribution facility in Brooklyn, OH.

I am here today not as an expert on brownfield, but as a concerned stakeholder in the city of Cleveland who has a vested interest in the redevelopment activity of brownfield sites within the city.

I will also discuss the reasons why the Plain Dealer was unable to

build our $200 million printing and distribution facility in the city

of Cleveland, OH.

Back in the late 1980’s we at the Plain Dealer made the decision

to build a state-of-the-art production and distribution facility that

would enable us to enhance our printing capabilities and more efficiently and cost effectively distribute our product. We had been on

the Cleveland landscape for almost 150 years, so we naturally

wanted to invest in Cleveland’s growth by building our new facility

within the city limits.

At that time, we had identified many sites in northeast Ohio that

were large enough to accommodate our needs and met other specific criteria, such as proximity to our production base and access

to freeways. Several of these sites were located in the city of Cleveland.

As it was our preference to build within the city, we further investigated the available sites in Cleveland. We were not able to locate one parcel of greenfield property within the city of Cleveland

that would accommodate our needs. The existing brownfield sites

within the city at that time caused us concern because of the uncertainty involved in the purchase of this type of property. For example, if the Phase I environmental impact studies shows that remediation would cost us between $6 to $7 million, one might figure

that into the total cost of the new building. However, the uncertainty comes in once you start the excavation and site preparation

and discover additional problems in the soil. It can create exorbitant challenges as to how and where to move the contaminated materials. Timing and, of course, the budget for the project are key

factors, and we were apprehensive about potential legal entanglements that could elongate the development and certainly add to the

total monetary expenditure.

Although, our objective was to invest in the economic development of the city of Cleveland, in 1994 we completed our $200 million production and distribution facility on 84 acres in Brooklyn,

OH, approximately 10 miles from our downtown location. Approximately 450 jobs and the associated tax dollars were moved out of

the city of Cleveland and into Brooklyn, where they remain today.

Not only were we unable to contribute to the city of Cleveland’s

economic revitalization, we increased the complexity of our own operation by operating out of two facilities in different cities. Although, we have fine-tuned our processes since then, the situation

has presented its challenges.

Since we felt strongly about having a presence in the heart of

Cleveland, when we made the decision to build our new office

building, we tore down our existing structure and built on the same

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site. And even though we had additional land on which to build in

Brooklyn, we felt a commitment to the city of Cleveland. Our new building represents a $38 million investment in the city

of Cleveland. Our business is dependent upon the strength of our

core city, Cleveland, which I point out to you ranks No. 1 nationally in poverty. Not a very good thing to have in our area. We cannot move north, south, east or west. We are here to stay and the

economic revitalization of our city is crucial to us.

Incentives for brownfield redevelopment projects provide an excellent means for encouraging investment in the city of Cleveland

and for cities across the country.

I want to thank you, Mr. Chairman and members of the committee, for allowing me the opportunity to appear before you today.

[The prepared statement of Mr. Machaskee follows:]

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Mr. TURNER. Mr. Davis.

STATEMENT OF TODD S. DAVIS

Mr. DAVIS. Good morning, Mr. Chairman and distinguished

members of the committee. My name is Todd Davis. I’m CEO of

Hemisphere Development, a nationally recognized brownfield redevelopment firm based in Cleveland, OH.

As a matter of background, I wrote the American Bar Association’s book on brownfield redevelopment. And I also sat on a number of national committees on brownfield redevelopment, including

the Board of Directors for the National Brownfield Association.

Hemisphere is actively developing almost 1,300 acres of

brownfield properties in Ohio ranging in size from 1.25 acres,

which is very close to the Case Western Reserve Campus that we

see here this morning, to 1,100 acres, as we heard this morning

also, in Lake County, OH. Our Lakeview Bluffs project in Lake

County has over 1.2 miles of continuous shoreline and 2.2 miles of

scenic Grand River.

These projects undoubtedly represent the most challenging and

complex brownfield redevelopment projects, not only in Ohio, but

throughout the country. And just to put what we do into a little

bit of context and perspective, brownfield developers are sometimes

perceived like modern day gun fires, riding into town, wearing a

white hat, providing the intellectual muscle, creativity and capital

to tackle a community’s brownfield needs. So in trying to keep with

that western motif, I’ll quickly summarize the State of Ohio’s

brownfield challenges into three categories; the good, the bad and

the ugly.

First the good. Fortunately for Ohio, we have two of the Nation’s

leading programs to address brownfields; the Ohio Voluntary Action Program on the regulatory side and the Clean Ohio Revitalization Fund on the funding side. And these programs undoubtedly

represent the catalyst of brownfield redevelopment in the State of

Ohio.

Next, the bad. In part, due to the way the regulatory process is

implemented, at least from a developer’s perspective, the deals are

still very difficult and it takes way too long to get them done. In

many cases, Ohio brownfield deals are simply economically

unviable without significant subsidy. Unfortunately, there’s currently no raw market-based incentive to facilitate brownfield transactions.

Finally, the ugly, which from my perspective as a brownfield developer is the thought of brownfield redevelopment in Ohio without

significant subsidy. So therefore, Congressman Turner, I applaud

your effort in coming up with a creative brownfield tax credit strategy, which from my perspective is the only way to get a meaningful

shift of capital from a private perspective into brownfield redevelopment, not only in Ohio, but throughout the country. Thank you.

[The prepared statement of Mr. Davis follows:]

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Mr. TURNER. Mr. Stone.

STATEMENT OF THOMAS STONE

Mr. STONE. Good morning, Mr. Chairman and members of the

subcommittee. My name is Thomas Stone. I’m the executive director from Mt. Pleasant NOW Development Corp., a CDC focussed on

housing and economic development.

The agency’s service area is the Mt. Pleasant neighborhood, or

ward 3, one of the southeast communities of Cleveland. I’m here

today to talk briefly about the impact of brownfields in Cleveland

and about one specific brownfield in my service area.

A study conducted by the Cleveland Neighborhood Development

Coalition Industrial Committee indicated that Cleveland has eight

industrial parks. The combined total acres of the eight industrial

parks was 569. Of the total number of acres, in 2003 only 88 acres

were available for development of new industrial facilities.

The study in 2003 indicated that 94 acres were slated for development. There appears to be and will continue to be demand for

additional space into the future. Therefore, more acreage for industrial and commercial uses must be established. From the 94 acres

to be developed, 1,416 jobs will be retained or created. This equates

to 15 jobs per acre.

The study further identified the next industrial areas within the

city of Cleveland. Seventy-three sites were identified. The sites had

to be three acres or larger. The sites were categorized as vacant/

non-productive or underutilized. The 73 sites represented 1,641

acres.

Allow me now to make some rough calculations to establish the

economic value of these new sites. While we observed 15 jobs per

acre created from the 94 acres previously mentioned, let’s be conservative and say only 7 jobs per acre would be created on the new

sites. That translates into 11,487 new or retained jobs. Using an

average manufacturing annual wage of $47,000, new payrolls to be

taxed by the city would equal, let’s call it $539 million. A tax, 2

percent tax would generate $10,797,000 in city tax revenue. If only

10 percent of the jobs are created annually, approximately $1 million in tax revenue would be created.

The other benefits that will be derived by cleaning sites and

making them available for development as are follows: Increase

employment in the city, so desperately needed, reduction of those

needing public assistance, and removal of blighted areas.

Now, while the study focused onsites that were three acres and

larger, there are many brownfield sites located within neighborhoods that are smaller but could become community and/or economic assets. One example is a junkyard site located at East 114th

and Kinsman Avenue in Cleveland. The total size is 2.15 acres. Another interesting fact concerning this site is that it is immediately

adjacent to Luke Easter Park. Luke Easter Park is the largest

urban park in State of Ohio at approximately 110 acres.

The junkyard site’s former uses were an exterminating warehouse storing pesticides, an auto wrecking yard, a dry cleaning

plant, a gas station and an embalmer’s facility. The main determined contaminant on the site is Benzo Pyrene.

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My CDC, Mt. Pleasant NOW Development Corp., for 2 years has

been pursuing a project to acquire and remediate the site to convert it to usable land. After the land is remediated, the plan is to

develop it for commercial/retail space. The project costs are as follows: Costs to acquire land, $137,000; costs to remediate, $416,000;

cost to determine scope of contamination, $50,000. A total project

cost of $603,000.

To date, Cuyahoga County and the city of Cleveland have provided grant funds to cover the cost of the analysis to determine the

scope of contamination. Mt. Pleasant NOW Development Corp. is

currently requesting from the city of Cleveland a $142,000 loan to

purchase the site and demolish an old abandoned structure.

The remaining challenge to making the former junkyard a viable

site is obtaining funding for remediation. In 2004, Mt. Pleasant

NOW Development Corp. submitted an application to the Ohio Department of Development Assistance Fund for $553,000 to acquire

and clean the site. The application was rejected, largely because at

the time of application there was no end user for the site identified.

If the sources of cleanup of brownfield sites will continue to be

limited to those sites that have identified end users, these sites will

continue to remain hazardous, unproductive eyesores in our communities. Also, if funding is not made available so that municipalities and non-profit organizations can acquire the sites, development

of sites will continue to be hindered. Not to mention that this is

an example of a blighted, contaminated site immediately adjacent

to an important community asset, Luke Easter Park.

This is just one example of many small brownfield sites scattered

throughout neighborhoods and communities in the State and country. Securing significant funding to return brownfields to productive use should be a major part of this country’s initiative to

strengthen America’s cities.

You very much for your time this morning.

[The prepared statement of Mr. Stone follows:]

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STATEMENT OF BARRY FRANZ

Mr. FRANZ. Good morning, Mr. Chairman and members of the

subcommittee. My name is Barry Franz. I’m a principle with the

consulting firm of Civil & Environmental Consultants located in

Cincinnati. I’m a registered professional engineer in the State of

Ohio and I am also a certified professional under Ohio’s Voluntary

Action Program.

In Ohio, both local and State governments have had to be the

lead entity in brownfields redevelopments. They both have a vested

interest in maintaining the economic and environmental security of

their citizens. The majority of Federal and Ohio programs available

to date to assist in brownfields redevelopment require local government agencies to be the lead entity.

These public-private partnerships are creating successful

brownfield redevelopments, but these successes are slow in coming

as compared to the total brownfields properties found in Ohio. With

their tax base at stake, many local governments in Ohio are eager

to work with private developers to redevelop their local brownfield

properties. This eagerness does not change the fact that

brownfields redevelopment is complex and costly as compared to

the greenfield property. Economic incentives are necessary to spur

this redevelopment in Ohio, particularly among small to mediumsize brownfields properties.

As an example to spur brownfield’s redevelopment, the tax bill

proposed by Congressman Turner could generate for Ohio many

millions of dollars annually for brownfields redevelopment. In addition, brownfields tax credits could be allocated for up to 50 percent

of the cost of demolition and remedial actions pursuant to the property being enrolled in the State brownfields programs, such as

Ohio’s Voluntary Action Program.

It is important to private developers to see a return on their cost

of the assessments and remedial actions required at the property.

While numerous programs are successfully assisting in the identification, cleanup and redeveloping of Brownfields properties,

much support is still needed. Legislation such as that proposed by

Congressman Turner and others will have a significant impact on

all of our efforts, both public and private.

I appreciate the opportunity to share with you my perspective as

a private consultant regarding the status of brownfields development in Ohio. Thank you.

[The prepared statement of Mr. Franz follows:]

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STATEMENT OF CRAIG KASPER

Mr. KASPER. Good morning, Mr. Chairman, members of the subcommittee. Thank you for the opportunity to testify about the

issues affecting brownfield development in Ohio. I’m Craig Kasper,

chief executive officer of Hull & Associates, and the firm’s Urban

Revitalization and Conservation Practice Leader. Our firm specializes in helping communities in the private sector transform neglected or abandoned property into productive uses.

As Mr. Davis said, in Ohio we have two tools to help redevelopment. One is our Voluntary Action Program. The second one is our

financial incentive, the $400 million Clean Ohio Fund. The funds

from these programs are used to preserve green space and farmland, establish recreational trails, and conduct brownfield assessment and cleanup. In Ohio we have also been relatively successful

at attracting Federal assessment and cleanup funds.

While the Clean Ohio Fund and Federal funds are outstanding

examples of incentives that motivate public and private investment

in brownfields, other opportunities, such as Federal tax credits, are

not only viable funding opportunities, but are necessary to help the

enormous population of abandoned and underused real estate in

urban cores and rural industrial communities.

Today you have heard testimony of many different issues affecting brownfield redevelopment from a variety of skilled stakeholders. I would like to focus my testimony briefly in the following

three areas: Inconsistencies in cleanup regulations that can be disincentives to using public funds; the lack of assessment funding

necessary to accurately understand the cost of cleanup and demolition; and finally, funding necessary for critical items beyond assessment of cleanup, such as demolition and infrastructure improvement and environmental insurance, all necessary to make

brownfields transactions successful.

While many States have cleanup programs to cost effectively

remedy brownfields, there’s still a great deal of conflict between the

State and Federal cleanup programs. In Ohio, we struggle sometimes with the acceptance of the State’s Voluntary Action Program

versus the Federal Memorandum of Agreement [MOA].

For example, a volunteer in Ohio who chooses to remediate a

brownfield must go through an arduous administrative process to

gain Federal acceptance on a cleanup the State would have accepted with fewer administrative hurdles.

Requiring brownfield redevelopments to go through inconsistent

or arduous cleanup programs to acquire new funding, such as Federal tax credits, may impede encouraging more brownfield redevelopment because of issues associated with cost and time.

Many brownfields continue to sit vacant and idle because communities cannot afford upfront assessment activities and potential

developers do not understand cleanup costs and the properties’ associated liability risks. In order to accurately understand these,

adequate assessment of the properties must be completed. Unless

the real estate value of the brownfield property outweighs the cost

of assessments, remediation and infrastructure, most of these properties carry upside down pro formas and become speculative developments. This can make developers hesitant to invest sometimes

significant funds early on to understand the environmental issues.

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While U.S. EPA brownfield assessment grants and our own

Clean Ohio assistance fund are valuable sources for funding assessments, the competition for these funds is fierce and the needs significantly outweigh those sources.

Consideration should be given to allow entities who ultimately

clean up a property in, of course, an improved State program offset

not just the remedial dollars, but the assessment dollars with financial incentives, including proposed tax credits.

Finally, while cleanup and assessments carry a big price tag of

brownfields, other issues that exist that can be just as critical to

a successful development. Demolition, upgrading infrastructure,

and environmental are just a few examples. Consideration to all

critical activities necessary for redevelopment should be considered

as eligible cost onsites that are ultimately cleaned up and, of

course, with an approved State program.

In conclusion, I believe Ohio is a frontrunner in implementing

programs that motivate brownfield redevelopment. But as successful as Ohio is, the resources do not scratch the surface of the legacies created from our industrial heritage.

Through greater Federal investment, whether through financial

incentives or working toward streamlined brownfield cleanup programs, the potential exists for increased brownfield redevelopment

opportunities. The additional Federal attention to brownfields

issued could sustain the work already underway at the local and

State level, and could provide the expansion of some existing quality cleanup and economic development programs.

I thank you for the time today.

[The prepared statement of Mr. Kasper follows:]

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Mr. TURNER. Again, I would like to thank each of you for taking

the time for being here and the expertise that you bring to the

table.

You will note that in the first panel we had, we had representatives of government and government agencies. In this panel we

have the private sector efforts on brownfield redevelopment. What’s

exciting here is we have two consultants that are working in

brownfields, we have two developers.

And then, Mr. Machaskee, I appreciate your participation here

and the story that you were telling, because typically when we do

this type of hearing and we focus on brownfield redevelopment, we

want to hear from those who undertake brownfield redevelopment,

who will focus on a site in trying to get it cleaned up and ultimately used with jobs returning, those who act as consultants in

providing the expertise to accomplish that and the Federal agencies

and State agencies that provide either oversight functions or funding functions.

What’s exciting about your story, being an end user, is that you

can give us insight into how these programs and processes don’t

necessarily serve the timeline that business has. When you’re going

to undertake as a possible end user of a site, looking at locating

a new facility, you’re not necessarily going to have the same luxury

of time that we will invest in sites that we as a community have

determined to be important and seek to for the redevelopment.

You spoke about two issues that I would like you to give your

additional thoughts on. And the one being the timeline of the business decisionmaking and what we need to do to make certain that

these sites are business ready when an opportunity comes along.

And the second is you spoke about the Phase I process that you

went through, and how in looking at a brownfield, the issue of uncertainty that you were faced when—even if you do have the luxury of time, the financial analysis of a project is limited by the information that you have on a Phrase I and you proceed with caution. If you would speak on those two topics.

Mr. MACHASKEE. Sure. First of all, I think that it was somewhat

surprising to us that looking at our criteria for what we needed,

and we needed at that time at least 35 to 40 acres, and we needed

rail access so that we could ship in newsprint, we needed access

to major freeways, and it also had to have some utility considerations as well as be central to our distribution system.

When you put those factors together, the city of Cleveland at

that time was only able to offer up two locations, and one right off

the bat we rejected because it was 21 acres. And in order to get

an additional at least 10 acres, we would have had to be on someone else’s timeline, relocate another company that had 200 employees, and plus there were utility and environmental considerations

there.

So the focus became then on a site that had 47 acres, close to

a freeway, and had rail, so it had some of the major components. The Phase I environmental shows $6 to $7 million of remediation

work. At the time of that Phase I environmental and with the owners of that property, we had to sign a confidentiality agreement as

to what the Phase I environmental problems uncovered. So I won’t

talk about that.

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I can only tell you that ultimately we bought 88 acres in Brooklyn, more than we needed, because, first of all, the price was half

as much per acre as what was being purported to us on the 47-acre

site. With the greenfield site I didn’t have to be concerned with underground storage tanks, defunct sewer lines with toxic waste in

them, or PCBs.

Now, once again, as I said in my opening remarks, if it was a matter of $6 or $7 million and everything else fell into place, you

might consider that into the overall cost. However, in building the

new plant, we were purchasing four printing presses at a cost of

$66 million. Ultimately, an installation cost of $7 million. Plus, we

were purchasing packaging equipment in the amount of $44 million.

Now, when you’re buying that kind of equipment, first of all,

you’re going to want to get it installed as soon as you can and operational to benefit from the cost efficiencies of producing in the modern plant. Second, the people that want to sell you this stuff aren’t

going to hold it up because you discover some additional problems

in the soil. And then that raises that big question, what do you find

once you start the excavation and what do you do with what you

find? And those were very murky areas for us.

And ultimately, we had to make the decision that we made to go

to Brooklyn on the greenfield site and then, because we feel strongly about the city of Cleveland, come back a few years later and invest in a downtown office building where we made a $38 million

investment and we still have 1,000 employees in Downtown Cleveland.

Mr. TURNER. Thanks. Mr. Davis, one of the elements of the legislation that we’ve put forward encourages participation from the

past pollutant, encourages them to come to the table because, a,

they have information that maybe you need about the site that you

wouldn’t know otherwise unless they were there.

And, b, there’s an awful lot of these properties that past polluters

still control or influence their outcome. And we think that by encouraging them to come to the table that they’ll bring properties

that communities want to develop or have currently been locked up

in abandoned sites.

Could you tell me about some of your experience in working with

past polluters and their views and interests, and what type of current incentives do you see to get a past polluter to come to the

table and assist in the redevelopment.

Mr. DAVIS. I think it’s a great question. I’ve had a lot of experience, as you can imagine, working with PRPs, people who are perceived to have created or actually did create those issues historically.

Perhaps, you know, in Diamond Shamrock’s case, it was created

in the twenties, thirties, forties, which preceded most of the environmental laws. They didn’t perceive at the time that they were

doing anything that was out of the ordinary in terms of ordinary

business. But, after the advent of Super Fund, obviously, the cost

associated with redeveloping those issues fell onto their laps, and

appropriately so.

I think that what you find as we negotiate now with people trying to unlock brownfield opportunities is that, especially in big

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companies, they’re still very, very hesitant, because they’re afraid

to kind of open up the information publicly.

We’re currently negotiating in your hometown of Dayton with a

company that, you know, I can tell you is somewhat hesitant with

respect to entering into the public domain and the public process.

Although, I know their intentions are pure and they want to do

what’s right for the community and they want to see the site remediated.

I think that there are a number of corporations that fit into that

model, but because there’s a lack of predictability, there’s a significant lack of people who understand how to go through this mine

field of different funding and the legal and demolition and environmental issues all at the same time, that their experiences are

mixed.

So, you know, from my perspective, it’s not about leveling the

playing field, it’s about helping the playing field. It’s tilting the

playing field so that it’s such a good deal for companies and communities to do brownfield redevelopment, that it’s not an issue.

People want to be doing this.

And I also believe that, while we’ve got great people in the public

sector, whether they’re the city, county, State working on these

issues, and we have some of the most talented people in the country working in Ohio, fortunately, the private sector has to be the

leader in getting these deals done. There’s only so much, there’s a

limited amount of grant dollars that will ever be available for

brownfield redevelopment.

We’re in an era where funding is being cut for regulatory programs, at Federal EPA, at Ohio EPA. You name the government

sector, funding is being cut. So in order to encourage the private

sector, whether it’s companies, private developers, anybody, to

work cooperatively to getting these deals done, at the end of the

day we’ve got a clean piece of property that can be reused. That’s

what we want and that’s what we should encourage.

Mr. TURNER. Mr. Stone, you mentioned the topic in your testimony that I would like you to speak more on, and that is the issue

of the blighting influence of brownfields. When we miss the opportunity of redeveloping a brownfield site, of course we miss the jobs

that could be on that site and we miss the potential capital investment on that site. But, another important aspect that you mentioned was the impact of brownfield on the surrounding property

and its decline to attract capital. Can you speak about that.

Mr. STONE. I think that’s a major issue that we look at. A number of these smaller brownfields sites are located in neighbors and

communities, certainly throughout this city, around the country.

The site that I have mentioned specifically is located just adjacent to a beautiful urban park, Luke Easter Park, which we have

right to the north of it. We have tennis courts, we have baseball

diamonds, we have a track. And actually, the individuals and children have the ability to, you know, wander off into the site. So

these are challenges for us when we have blighted conditions.

And certainly my job in my organization is to redevelop or to

change the physical appearance of some of these, some of our more

challenged neighborhoods. And so when you’ve got a site of this

size that’s unproductive, that’s blighted, it really takes away our

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ability to certainly market either a housing redevelopment situation or, in this case, economic development of jobs. So that blight

cannot be underestimated.

If we’re going to be able to market or bring companies back to

the area, the first thing actually is what’s the condition, what do

they see. And in a lot of cases that turns them off right there, not

even getting to the cost. So in just getting also to the point of, you

know, we just miss something when in my case it’s a matter of trying to market a site when it’s not ready.

We’ve had in this case three entities that were looking for a site

in the area, bringing new jobs. But when we tell them basically

there’s a time horizon of basically 18 months to 2 years before we

could even potentially clean the site, they’re saying, thanks but no

thanks.

Businesses are looking at when they want to put in a new store,

where they want to create a facility. They’re just looking for the

available site. So if we can only present them with the opportunity

of, well, in 2 years we might have something available for you, then

we continually miss these opportunities. So blight is a major issue

with communities, but also this missed opportunity.

Mr. TURNER. Ms. Tubbs Jones.

Mrs. JONES OF OHIO. Thank you, Mr. Chairman. In your written

statement, Mr. Stone, you said that the problem with brownfield

redevelopment is having to have an identifiable user in order to do

the redevelopment. Are you suggesting that you as a non-profit are

going to be able to do the remediation and then sell it or develop

it with someone else.

Mr. STONE. Certainly we would like to do that. In the current

site we are now working and we have been initially approved for

a loan with the city of Cleveland to acquire the site. What that will

allow us to do and we’re working on now is a development project

with an actual end user. As I mentioned in my comments some 2

years ago, a year and a half ago, when we made an initial application to the assistance funds with the State of Ohio, we did not have

an end user identified. We’ve been working through that process.

As I said, it’s marketing, trying to find cleanup funds.

Mrs. JONES OF OHIO. Basically my question is: Would you want

to be the identified person until you got ready to develop for someone else? Is that what you’re asking that you ought to be able to

do?

Mr. LATOURETTE. I think we would be willing to do that as a

community development corporation.

Mrs. JONES OF OHIO. That’s what I mean, as the community.

Mr. STONE. Right. We play that role. We look at our service as

the table setters and we’re going to acquire the prep settings. In

this case there’s a lot of liability and the need for funding to clean

the site. But we have to be in a position that we have available

sites. So we would hold those sites. We can develop it ourselves or

be in partnership with an entity to develop.

Mrs. JONES OF OHIO. Mr. Davis, based on the experiences that

you’ve had with representing and litigation on those kinds of

issues, what would be the downside to a non-profit being able to

hold a piece of property as an identifiable owner for cleanup? And

what would be the upside.

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Mr. DAVIS. I think the only downside from my perspective is that

it’s a non-profit instead of a for-profit. I mean, I think most certainly it’s a great idea.

And just following on some of the earlier comments about the

Plain Dealer, and particularly with respect to that issue, to the extent that we had the ability to go in, and I think you’re referring

to the Collinwood yard site initially, which is a site that we actually worked on, I think, subsequent to the Plain Dealer’s involvement in that site. Had we had the ability——

Mrs. JONES OF OHIO. That’s where Sodexho is now.

Mr. DAVIS. Yes. The Food Bank.

Mrs. JONES OF OHIO. Right.

Mr. DAVIS. But had we had the tools back then that we have

now, had we had the foresight, the wherewithal and somebody who

is willing to go in and address those issues, perhaps the Plain

Dealer would have been there; while we wouldn’t have had an end

user necessarily in mind, we would have, as you’ve said, we would

have set the plate. We would have set the tabletop.

We went in. End users want a clear, clean, fully remediated piece

of property that they can build on in the inner city or wherever as

quickly as they can. They don’t want to deal with environmental

issues. They don’t want to know about environmental issues. They

want to make sure that their site is competitive with a greenfield

site.

And I don’t blame them, because it’s not worth it to a business

person, even a great community-minded business person, who has

the best interest of the toughest areas in mind. They have to make

a business decision and it’s got to be in their best interest to do

that.

Mrs. JONES OF OHIO. Thanks, Mr. Davis.

Really quickly to Mr. Franz. Do you want to add something?

Mr. MACHASKEE. Could I just add something to that.

Mrs. JONES OF OHIO. Yes, please.

Mr. MACHASKEE. It’s a hypothetical, but I think it will make the

point.

We all know that the Cleveland Clinic, University Hospitals use

an awful lot of Johnson & Johnson products. Supposing that a

team is put together to go after Johnson & Johnson and say, look,

why don’t you come closer to your customers and put something in

the inner city of Cleveland, create jobs and supply all those gauzes

and everything else that you manufacture to these medical institutions. What would the city of Cleveland offer them? We don’t have

it. That’s the point.

Mrs. JONES OF OHIO. We have to come up with something.

To Mr. Franz and Mr. Kasper, my time has kind of run out, can

you identify one project that you’ve worked on and tell me what

community was in, what was there before you worked on the

project, what kind of jobs and income came as a result of your redevelopment. One each.

Mr. FRANZ. One of the more recent ones that we worked on actually was unique, what we call vertical brownfields. It was not a

demolition of a facility. It was basically the cleanup and remodeling

of what is called the Fort Piqua Hotel.

Mrs. JONES OF OHIO. That is——

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Mr. FRANZ. In the city of Piqua. That’s what it was, it was an

old hotel. In that particular instance, the site had been used for everything from a hotel back in the 1840’s, all the way through apartments, as well as currently had a sports bar in the basement at

the moment.

The city of Piqua as part of their brownfields redevelopment

wanted to take the hotel and convert it into a space that could be

used for their library and also for a number of senior citizen services. So basically that’s what we did. We went in and did the assessment, submitted the findings and as well as our application for

a Clean Ohio Fund.

Mrs. JONES OF OHIO. What did it cost.

Mr. FRANZ. For the assessment work?

Mrs. JONES OF OHIO. For the cleanup.

Mr. FRANZ. For the cleanup, total cost including the assessment,

was probably about a half a million dollars.

Mrs. JONES OF OHIO. I’m cutting you off because I’m running out

of time. Mr. Kasper.

Mr. KASPER. I would normally talk about the $1.2 billion investment, the DaimlerChrysler facility in Toledo, OH. But besides everyone being sick of hearing about it if you spend $1.2 billion on

brownfield, issues go away pretty quick.

I would like to concentrate or make a few remarks about a

project in Springfield, OH, about 45 minutes west of Ohio. And industrial city of a little under 70,000 people. And several years ago

we took a very small brownfield, about 4 or 5 acres on the edge of

Buck Creek, beautiful area right in the middle of the industrial

corridor, and did some demolition and cleanup. We used both State

and Federal money. Ohio EPA and U.S. EPA were great partners

in that project, as well as the leadership from the city of Springfield. And about 6 months ago they opened up a regional cancer

treatment facility there.

It’s a great story. Hopefully it will be a winner in the Phoenix

award when they make the application this year. But that’s

brought leverage for that city. That community pulled together two

hospitals that are recently merged and that were looking at taking

both the campuses outside of the city and working very hard to

bring them near their regional cancer center, using that leverage

and bring them back to the urban core. So we’re excited to see that

happen and worked very hard for that success.

Mrs. JONES OF OHIO. Thank you very much. Mr. Chairman, I’m

going to excuse myself and try and make this other event where

it’s the new redevelopment in the 11th Congressional District. I

thank you for bringing the hearing here.

Mr. LATOURETTE. Thank you, Mr. Chairman. Just a couple of

housekeeping matters. I think, Mr. Chairman, you mentioned earlier that Congressman Kucinich is involved in the DFAS matter

that Ms. Tubbs Jones was involved in as well.

And then in addition, at the beginning of the hearing I talked

about the article that appeared in yesterday’s News Harold relative

to the exciting project that Mr. Davis is involved in out in Lake

County. And he corrected me during our break and indicated that

in the Plain Dealer Sunday Magazine there was also a very nice

article that had to do with the grapes that we were talking about

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a little earlier, that they’re growing on the old soup pond. And I

don’t know if that article is written by their outstanding environmental reporter, John Keener, but I do know that Mr. Keener

writes about the environment and does like grapes.

The second thing that I wanted to talk about a little off the subject, but I feel constrained to do it, because one of my other hats

is to serve as the Railroad Subcommittee Chairman on Transportation and Infrastructure. Mr. Machaskee was talking about the

importance of being near rail lines in relocating a business site and

the challenges being faced by brownfield redevelopment.

And I have to tell you that I became aware last week that some

people in the City Council in Cleveland are attempting to pass not

in my backyard legislation, which would cause rerouting of all Norfolk and CXS trains so they don’t travel through the city of Cleveland if they had materials that these councilmen would feel objectionable.

And I would just say, if you’re upset about what happened with

the service office, if you don’t like what happened with DSAF, if

you’re nervous about the 700 jobs still out on the line at NASA

Glenn, one way to shut down the city of Cleveland is to engage in

this silly knee jerk not in my backyard legislation.

Having said that, Mr. Davis, you, I think, talked about the good,

bad and ugly. And I think Mr. Machaskee’s story on the Plain

Dealer is important because I represent a lot of greenfields east of

the city. You’re to be commended for what you’re doing on the

brownfield site in Fairport Harbor.

There is this notion that it’s the greedy corporate giants that

have no loyalty and so they’re fleeing the city. And I think with the

Plain Dealer, where they tried and didn’t succeed, it’s illustrative

of the fact that isn’t the case.

And what I wrote down is, you know, you talked about the good,

but when we got down to bad and ugly, and I have to tell you, I

haven’t finished your book yet, but I still have it. But you still say,

you say that it takes way too long to get these deals done. What

are the impediments that you continue to see to make these deals

take too long and what is your opinion of Mr. Turner’s legislation

in terms of resolving some of those?

Mr. DAVIS. Some of the reasons it takes too long is, just to give

you an example with respect to our project, the first letters that we

sent to the company seeking our involvement in trying to get in

and volunteer to be the redeveloper there were sent in 1997. It took

us, to your point, Chairman Turner, about 4 years to convince Diamond Shamrock and the successor to Diamond Shamrock that

there was a credible team that could go in and actually make a

deal like this happen. That was before there was any public involvement whatsoever.

So behind the scenes it typically takes a number of years to just

convince companies that it’s worth their while to take a chance on

doing these projects. Then when you get into the formal process,

it’s about making sure that we’re lining up all of the regulatory

issues at the same time we’re lining up our financing issues.

And if you’re relying solely and exclusively on grant funding cycles, it’s very hard to make those schedules work. And typically,

the limit on grant funding itself, you know, Clean Ohio, which is

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clearly the leading grant program in the country, has a per project

limit of $3 million per project.

So when you put that in the context of the Lakeview Bluffs redevelopment, where the numbers, the cleanup numbers are far more

than $6 to $10 to $12 to $20 million ultimately, while certainly important money, just one level of the financing.

I think in terms of what Congressman Turner’s bill would do,

again, if you shift the incentive to private marketplace and you

come up with a self-implementing private tax program, and you’re

doing it as a percentage of cleanup costs, cleanup costs defined by,

you know, however the final definition comes down, then you can

actually raise those limits of private investment and shift the pace

dramatically.

So I think that’s another hidden advantage that people might not

recognize that’s just really an advantage to the bill.

Mr. LATOURETTE. With respect to the letters that you sent out

in 1997, not only to the brownfields Super Fund site, I mean, legislative solutions prior to Mr. Turner’s, didn’t they sort of encourage

companies to hunker down and lawyer up rather than coming forward, coming to the table?

Mr. DAVIS. There’s absolutely no question about it. I mean, being

an environmental lawyer, having made my limit in living for years

before this as part of that litigation trough, I can tell you that nobody wants that scenario. The companies don’t like it. I think that

the only people who like it probably are the lawyers. I know we’re

not a sympathetic bunch.

So from that perspective, the policies made no sense. And I think

if you look at these sites pragmatically and not worry about blaming different people about what happened historically and focus on

what we want to accomplish, it’s end use versus process. And that’s

the way to get a meaningful shift in redevelopment projects.

Mr. LATOURETTE. Probably the reason why the only people that

have more jokes about lawyers are politicians.

Mr. Franz and Mr. Kasper, both of you talked about getting a return of cost of investment. I would just ask you, based on your experience, and Mr. Davis, too, if you want to jump in, is there a rule

of thumb that companies look at, and the Plain Dealer, Mr.

Machaskee talked about maybe $6 or $7 million, if that’s where it

all ended, is there a rule of thumb that you’re aware of that businesses take a look at when they’re looking at a brownfield in terms

of what’s going to be the return on my investment. And, again, if

you’ve had a chance to look at Mr. Turner’s bill, does that help ease

minds of those that would make those investments?

Mr. KASPER. As far as actual, what type of return, I think I can

pass that over to Mr. Davis. But definitely, you know, when I see

private sector properties, they’re coming in with their basis in the

property. And they know they’re in a brownfield, they’re going to

spend more money and try to figure out, how do they take the upside down project and right it. So you have that issue right there.

So just a net zero to start off is the first hurdle.

The other issue we heard of is the uncertainty that’s been spoke

of. So if they go into this thinking the basis is a million dollars on

a 10-acre property. So if they have $100,000 an acre, in addition

to anything else, and it’s $3 million, that doesn’t end up good for

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anyone. So it’s not just a matter of understanding what type of return they’re getting, it’s really trying to understand how do they

take care of the uncertainty and the risks and maybe how to transfer those risks.

As far as what Chairman Turner is proposing, I think, as I said

in my written testimony, any Federal incentives that can help,

again, right those upside down projects would certainly be very valuable for redevelopment.

Mr. LATOURETTE. Mr. Franz, do you want the jump in?

Mr. FRANZ. Basically economics drive the project no matter what.

So if the economics are negative, the project is not going to go forward. It’s relatively—it’s simple from where I stand.

Mr. LATOURETTE. Do you think that, as Mr. Kasper suggested,

that a zero return is enough for people, or do they need to do better? I would hope that Mr. Machaskee’s property out in Brooklyn

is going to appreciate a little over the next couple years and is not

going to be worth the same as he paid for it. Don’t people have the

opportunity to expect that as well?

Mr. FRANZ. Yes.

Mr. LATOURETTE. OK. Mr. Chairman, thank you very much.

Mr. TURNER. I want to thank all of you for participating and,

again, giving your perspective in working on these issues. This will

become part of our larger testimony that we’ve been taking on

what is the Federal response, how are our programs working, what

other tools do we need in the toolbox, and then specifics of reactions to the tax credit bill and ways in which we might be able to

assist communities.

Before we conclude, I want to give each of you an opportunity,

if you have any concluding remarks or anything else that you

would like to add for the record.

Mr. MACHASKEE. Thank you, Mr. Chairman. As an observer in

Cleveland and being with the Plain Dealer for some 25 years, certainly I have observed the Greater Cleveland as a shrinking market for many years. It’s been well-documented that our out migration is greater than our in migration. And we’ve had a significant

loss of jobs, particularly in the last 4 or 5 years.

And along with that comes the reduction in spending power, discretionary spending power, and that hurts all businesses and all

providers of goods and services. So we need people, we need people

to come here. But what are they going to come to? They need to

come here because we have jobs. And the only way we’re going to

get more jobs here is to be able to attract business investment, either a new business investment or business extension.

And, therefore, this brownfields remediation legislation that

you’re proposing, I think, is very key to that, to attract business.

And so I want to applaud you, Mr. Chairman, and your subcommittee for all the work that you’re putting into it.

Mr. TURNER. Any other comments?

Mr. STONE. Thank you, Mr. Chairman. I just wanted to emphasize, and I said earlier to you that I’m here sort of representing the

little people in, as you mentioned, blighted conditions in neighborhoods. And in a lot of cases these are projects or sites that are

much smaller in size, somewhat fall below the radar screen, but

clearly you have them sitting in the middle of neighborhoods.

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The one that I mentioned is in one of the most densely populated

areas in the city of Cleveland. So you have existing homeowners

and residents of that, you know, to some extent in the low income

situation, really don’t have many other options, so they’re there.

And so we continue to see situations that they don’t really have the

remedies to get rid of something that’s very detrimental to their

own health and well-being. And, again, it’s a missed opportunity as

it relates to job creation.

So as I think about your legislation, and I don’t have full knowledge of it, when we think about tax credit, compare that to what’s

been done through the deposit tax credit program, which I think

is the best program that’s been established for the creation of affordable housing that’s been responsible for the government, and

now we have the new markets tax credit. We see these projects, we

see this type of legislation very effective in creating incentives.

So I would applaud you that this is another way in which private

investment can be attracted to these challenged sites and these

challenged areas, so thank you.

Mr. TURNER. Gentlemen, any other comments?

If not, I want to thank Case Western Reserve University for obviously being our host. They’ve been very helpful in our being able

to pull this together and to be here today. I want to thank all of

the people who have come to hear the testimony. And also Mr.

LaTourette, I greatly appreciate his assistance in being able to pull

this hearing together, and the attendance of Ms. Stephanie Tubbs

Jones. Thank you.

We’re adjourned.

[Whereupon, the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

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